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Strategic Focus on Compensation & Benefits
The introduction video to this week’s lesson, compensation management, recognizes many variations available for businesses when deciding strategic compensation plans. However, compensation managers must regularly evaluate the foundations of adopted pay/reward systems. Business executives focus on specific decisions related to strategy fundamentals to ensure future success and fewer requirements for updating/changing compensation strategy. Fair treatment, pay differentials, and limited variations to the strategic plan safeguard viable measurements and attainable strategy. I have witnessed the negative consequences of commitment to failed compensation strategy (elements) as a financial manager, human resource manager, and recruiter for the Air and Space Forces. Fair treatment must be the baseline when determining pay for employees.
Fair & Equitable Pay
Martocchio (2020) reveals the Fair Labor Standards Act (FLSA) of 1938 generally reflected the minimum wage, pay earned working past normal hours, and restrictions against child employment. Employers must also reveal their pay standards and agreed workplace locations/requirements (DOL, 2023). Healthy compensation strategies are built with the recognition that the company must be able to afford the pay structure while offering legal and fair-minded job design (Böckerman et al., 2020). Employers that operate outside of FLSA risk legal action and limit the prospects of applicants into necessary positions/functions within the company. Employers must reflect on the fairness of their pay structure when developing their compensation strategy. Labor unions also exist to ensure employees have advocates when defining pay and benefit structures (Martocchio, 2020). Therefore, setting healthy compensation standards determines organizational success, legal financial practices, and employee satisfaction.
Reasons for Pay Differentials
Compensation standards that maintain fairness for employees will reflect geographic and occupational characteristics/values the organization holds (Martocchio, 2020). Organizations' positions/jobs in high-cost areas like California see substantial wage increases. The pay differential is high to account for the cost of living. Companies that follow the state/federal guidance regarding FLSA implement minimum wage policies in their compensation strategy (Clemens, 2021). The formulation of healthy compensation plans determines the overall success of positions within geographically separated areas. Additionally, high-valued jobs require pay matching the competitive market to attract and maintain satisfied employees (Ali & Anwar, 2021). Companies not considering the financial needs/desires of every unique position will reflect in a failed compensation strategy.
Personal Experience with Strategic Compensation in U.S. Military
The United States military has adopted a long tradition of a simple pay structure. The transparency allows members to identify compensation progression, but many argue there is an unbalanced/unfair approach to the pay construction. Certain, under-manned career fields receive multi-thousand-dollar sign-on bonuses based on military need, not competitive market pay. Furthermore, career fields requiring advanced science degrees/certifications are paid the same as general education/humanities degrees. Career fields such as religious leaders and administrators earn the same pay as engineers and doctors. Martocchio (2020) states that these core compensation strategies do not account for competitors nor achieves intrinsic/extrinsic compensation. Adopting these plans is arguably the cause of the decline in recruitment (Cohen, 2023). Military leaders (and Congress) must consider Biblical values when defining compensation plans within future presidential budgets.
Biblical Integration & Conclusion
All people live equally in God's framework. Setting a healthy compensation plan mirrors the reward system God gives His followers in this life and into eternity. Executives/Organization leaders must reflect on compensation based on efforts and commitment to the organization, job/position, and team, with fair/just treatment (Col, 3:23-24; Prov 19:17, NIV, 2022). Fairness is defined by God through supporting those in need, like family, rooted in care/compassion (Psa 82:3). Strategic foundations for compensation plans must begin with generosity as their ethical, Biblical basis. Pay scales must also account for differentiation through basic needs assessed by the compensation managers. God expects His people to pay what is due to those who work diligently (Deu 24:15). Strategic compensation must begin with Biblical, legal, and ethical elements for the organization's mission to prosper.
References
Ali, BJ, & Anwar, G. (2021). An Empirical Study of Employees’ Motivation and its Influence Job Satisfaction. International Journal of Engineering, Business and Management, 5(2), 21-30. .
Böckerman, P., Bryson, A., Kauhanen, A., & Kangasniemi, M. (2020). Does job design make workers happy?. Scottish journal of political economy, 67(1), 31-52. .
Clemens, J. (2021). How do firms respond to minimum wage increases? understanding the relevance of non-employment margins. Journal of Economic Perspectives, 35(1), 51-72. .
Cohen, R. S. (2023). Air Force again looks to cut bonus pay for some airmen in tough jobs. Air Force Times. .
Martocchio, J. J. (2020). Strategic compensation: A human resource management approach (10th ed.). Upper Saddle River, NJ: Pearson ISBN: 9780135175910.
New International Version (NIV) Bible. (2022). BibleGateway.com. .
U.S. Department of Labor (DOL) (2023). Wage and Hour Division. Wages and the Fair Labor Standards Act. .
